Precious metals investment terms A to Z

Registered Gold

Comex has several warehouses for metals (as investors may take delivery), which contain lots of gold. The bullion held in these warehouses is divided into two categories: eligible gold and registered gold.

According to Comex, eligible gold means all metal that is acceptable for delivery against the applicable metal futures contract for which a warrant has not been issued. Conversely, registered metal means eligible metal for which a warrant has been issued. As one can see, the only difference between registered and eligible gold is whether a warrant has been issued or not. What is the warrant? It is a document of title demonstrating that the referenced quantity of the covered metal meets the specifications of the applicable metal futures contract. We can say that the warrant is a warehouse receipt which works like a check – it is a bearer instrument which represents some amount of gold in the registered stocks.

In simpler terms, registered gold is gold that is fully available for delivery to investors with long positions who stand for bullion delivery, while eligible gold means gold that only meets the exchange’s requirements. Registered stocks are officially recognized by Comex for good delivery on the exchange and that inventory is set aside to make delivery against gold futures contracts. However, investors should not forget that eligible gold stocks may become registered stocks just with a simple electronic keystroke which attaches a warrant and thus registers the bullion. In other words, generally all gold in Comex warehouses is available for delivery; it just needs a warrant attached to it, which makes it registered. This is why all the claims that Comex is going to default, because the inventory of registered gold is decreasing, are nonsensical – eligible gold can easily be converted to registered.

Typically, the quantity of registered stocks in Comex warehouses tends to track gold prices higher and lower. The decline in gold prices indicates that gold is being better used off the market, instead of being held on the exchange – therefore, registered gold stocks are falling. Conversely, rising gold prices attract more investors who eagerly want to own and register some gold.

We encourage you to learn more about gold – not only what registered gold means, but also how to successfully use gold as an investment and how to profitably trade it. A great way to start is to sign up for our gold newsletter today. It's free and if you don't like it, you can easily unsubscribe.

In a futures contract two parties agree to exchange an asset (gold, currencies, stock indexes, hog bellies) for a price agreed upon today (the strike price) but with delivery to take place at a specified future date. The party agreeing to buy the underlying asset, is said to be "long" and hopes the price will go up, and the party agreeing to sell the asset is said to be "short" believing that the price will decline. Gold futures term usually refers to a futures contract that is based in the price of gold.

Gold had served as money for thousands of years until 1971 when the gold standard was abandoned for a fiat currency system. Since that time, gold has been used as an investment. Gold is often classified as a commodity; however, it behaves more like a currency. The yellow metal is very weakly correlated with other commodities and is less used in the industry. Unlike national currencies, the yellow metal is not tied to any particular country. Gold is a global monetary asset and its price reflects the global sentiment, however, it is mostly influenced by the U.S. macroeconomic conditions.